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Reportage. Reporting from the inside on life in North Korea, il manifesto discovers that the government is tolerating an emerging market economy and signs that political reforms may also be on the way.

Free markets and outside ideas are transforming life in North Korea

It’s a cliche basically accepted by all Western media to report imaginative news about the Democratic People’s Republic of Korea without confirmation.

There are dozens of examples: the national soccer team imprisoned in the aftermath of losing in the Asian Games to South Korea, the ban on getting haircuts like Kim Jong-un, the killing of Jang Song Thaek by a pack of hungry dogs (the most creative journalists added that Kim kept the dogs perpetually underfed to make them more aggressive).

And let’s not forget the 2012 scandal over the book Escape from Camp 14, by Blaine Harden, which tells the dramatic story of Shin Dong-hyuk, the only prisoner to have escaped from a re-education camp. Shin was called for testimony from numerous human rights organizations and even the U.N. about the cruelties committed against dissidents. While there’s no doubt about the widespread existence of prison camps in North Korea, some uncertainty was revealed when Shin confessed that some of his statements in the book and in his U.N. testimony “are not real,” but the result of his imagination.

It certainly doesn’t help that to interpret news about North Korea requires a great deal of experience and knowledge about the country, which writers can’t gain from sitting at their desks in front of a computer. Of course, entering the country is still complicated, although journalists and photographers can now visit more easily.

The real North Korea

But then, what is the “hermit kingdom” really? Putting aside the stereotypes of a prison-like state, resistant to any change and headed by an incapable, smug and tyrannical leader, we discover a place that, since the beginning of the 21st century, has been subject to drastic and rapid changes, both economic and social, as well as political.

Even the human rights situation is changing. For almost 15 years, the government’s retribution against those who challenge the party’s labor policy have been loosened. The sentences, which were previously collective, today only affect the individual, allowing the family to continue to live in freedom, albeit with serious restrictions (no city transfers, exclusion from the party, no work in public offices considered vital to the nation). The conditions in the camps seem improved, with greater flexibility for the prison administration to consider the humanitarian needs of the prisoners.

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Prison reform is only the latest action on economic and social reorganization initiated by Kim Jong-il, father of the current leader, after the catastrophic food crisis of the 1990s, which claimed hundreds of thousands of victims. The effects of these changes are shown in all their sharpness in the cities — Pyongyang and Wonsan in particular — but expand also to the countryside, albeit in a more subdued way.

Emerging market economy

The slow, but steady, penetration of the market economy has, at least in part, helped the state in its difficult effort to supply stores and its citizens with necessities. The improvement of agricultural production achieved by modernizing the machinery fleet, a steady supply of spare parts and a reform that tolerates the private sale of products, has eliminated hunger from nearly the whole country. Pyongyang continues to churn out data on crop production that’s lower than real productivity, but that’s a gimmick to maintain support from donor countries.

Until a few years ago the trick would have worked, but today with satellite imagery and more widespread access to the most remote areas of the country by international organizations, the supervision is more precise. Now there is evidence of malnutrition, but not starvation. Credit also goes to the massive aid (about 1 million tons of food a year) mainly from South Korea, China and the United States.

Although Kim has begun to reintroduce the food distribution system controlled by the state, which his father interrupted in the early 1990s, only 40 percent of the population can benefit. The rest rely on golmikjang, unofficial markets tolerated by the government and present in each district, the spearhead of a new emerging market. In the farmers’ stalls, one kilo of rice costs between 4,000 and 7,000 won ($4.44 to $7.78), an exorbitant price compared with the fixed rate of 44 won per kilo in state stores — whose shelves are often desolately empty. The private cost is often prohibitive, however, considering the average North Korean wage is 7,000 won per month.

The nouveau riche

How, then, do the North Koreans survive? By simply striving to occupy those niches that the state fails to meet. The illegal trade with China by enterprising North Koreans who cross the border importing contraband is no longer repressed. This both allows the population to find essential commodities otherwise impossible to find in state stores, and it grants the border guards lavish “tips” left by the traders.

In the golmikjang of border towns, the yuan (or the dollar, sometimes the yen) has replaced the won as the currency of trade: A pair of shoes costs 250 yuan, a pair of pants is 80 and an overcoat is 200. In the cities (and lately even in some country villages), it is now common to see the opening of restaurants, bars and cafes managed by families or individuals, where a meal costs between $4 and $5. Almost all the ingredients come from abroad. The most hip places even serve Japanese and South Korean food and beverages. A pizzeria recently opened in Pyongyang.

This new, advancing economy allows an average family to increase its revenue 20 times over. Average family income is 100,000 won per month: A maid in one of those private restaurants earns $40-50 per month. But a black market grocery business can bring in up to $500 per month.

New status symbols are popping up, and, as a testament to how the nation is changing, they are no longer hidden, but even ostentatious. Although it is impossible to communicate with the outside, the number of North Koreans buying mobile phones is constantly increasing, as are the number of families that have refrigerators, televisions and radios. Along the streets of the major North Korean metropolises it is not difficult to find adults and kids fiddling with smartphones or taking selfies. Over four years in North Korea, around three million mobile phones were sold. This is the class of the nouveau riche, the donju, which is taking hold in the country. This drastic change is also revolutionizing the social and political stance of North Korea.

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Military service, once reserved for the elite and families more connected to the ruling Workers’ Party, is now seen as a burden because it deprives youths of 10 years of economic productivity. So, many try to avoid conscription by heaping generous sums of money to officers. This explains the recent move by the government to include women in the military to make up for the escape of new recruits.

The sudden availability of cash that many have managed to get their hands on has triggered a rush toward real estate investments. In North Korea, private property is still forbidden, but every family is entitled to an apartment. So how do they do it? Simple. The most wealthy families resort to a legal loophole: the exchange of apartments. The law does not prevent consenting tenants from borrowing dwellings granted by the state; so those with money “purchase” more desirable apartments from families who agree to move to less advantageous locations. The going rate for 100 square meters in the central district of Pyongyang is about $150,000 up to $200,000 if the apartment is located on a lower floor (the elevators don’t often work for lack of electricity). An industry of agencies has sprung up to facilitate negotiations between tenants.

Political reforms ahead

But it’s not just North Korean society that’s transforming: The regime, considered to be monolithic and unmoving, has in recent years undergone and continues to undergo jolts. The sudden ministerial shakeups, the executed members of the nomenklatura and, above all, the changes within the Kim family, suggest that the leadership of the country is preparing for a forthcoming shift of political direction. Ultimately, Kim is a leader who has ruled the nation despite the low expectations of those who saw him as too young and inexperienced. These two qualities (especially the first) are considered fatal in a society molded on the Confucian tradition, where wisdom and respect go hand in hand with age.

Surely his years spent studying in Berne have played a fundamental role, allowing the North Korean leader to understand the mechanisms of Western democracies, to connect with regular society and to sample a different type of economic market. Perhaps it was this atypical training (though not entirely unique; more and more North Koreans are sent abroad to learn how the global economy works) that caused the about-face turn away from China in favor of its old enemy: South Korea.

The execution of Kim’s uncle, Jang Song Thaek, in 2013 and the changes still underway in the apparatus of the party seem related to Kim’s intention to disengage from the orbit of China, whose gravitational force was represented by Jang. Between 2010 and 2012, years that Jang was deputy of the powerful National Defense Commission, Korean dependence on China climbed from 57 percent to 70 percent of total trade in Pyongyang. In 2014, the year after his death, trade between the two countries saw its first decline since 2009.

Meanwhile, transactions with South Korea are on the rise, although they have undergone significant change due to geopolitical tensions. The relaxation of relations between Pyongyang and Seoul is even felt in the homes of North Koreans and in the golmikjangs. DVDs of South Korean soap operas have gone scarce, and the authorities, knowing that almost every home has a shortwave radio to pick up transmissions from abroad, don’t bother to keep up the outdated rhetoric and propaganda against their brothers to the south.

Pyongyang’s willingness to understand and engage with capitalist markets was evident since 2004, when the Swiss entrepreneur Felix Abt founded the Pyongyang Business School, an institution that trains North Korean ministry officials and managers with a view to opening the country to the outside. Abt, among others, had first cast doubt on Shin’s story, though no one at the time listened.

Most recently, a Christian evangelical church organization opened the Pyongyang University of Science and Technology, the first private university in North Korea, where American, South Korean, Canadian and British professors teach about 500 students various subjects, including, of course, market economics.

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